Canada: Water Use In BC: Recurrent Short-Term Water Use Approvals Are Lawful

In yet another indication of the increasing prominence of water
use issues in BC, the Supreme Court of British Columbia recently
upheld the practice of the BC Oil and Gas Commission to grant
recurrent short-term water approvals for oil and gas activities
under the Water Act. In Western Canada Wilderness Committee v British
Columbia (Oil and Gas Commission), 2014 BCSC 1919, (a case
we first reported on
here) the petitioners, Western Canada Wilderness Committee and
Sierra Club of British Columbia Foundation, alleged that the
Commission's practice of granting recurrent short-term water
use approvals to the same oil and gas companies for the same
location was in violation of the Water Act. The Court
disagreed, holding that there was nothing illegal about the
Commission's practice of evaluating each successive application
for an approval on a fresh basis and according to established
criteria.

Facts

Under the Water Act, the ownership of all water in
British Columbia, as well as the right to use it, is vested in the
Crown. The government, through various agencies, may issue licences
or short-term approvals to use water. In this case, the
narrow issue was the Commission's practice of issuing recurring
short-term approvals. However, because the Ministry of
Forests, Lands and Natural Resources Operations (FLNRO) employs a
similar practice of issuing short-term approvals to various users
(land or mine owners, municipalities, water users' communities,
federal and provincial ministries, and so on), the case has
implications that go beyond the oil and gas industry.

As set out by the Court:

In order to consider an application for a s.8 [short term]
approval, the applicant must provide FLNRO with information, such
as the proposed source of the water, the point(s) of diversion of
the water, the total volume of water to be used, the maximum rate
of withdrawal, the time frame for the diversion and the purpose for
which the water is to be used. FLNRO considers the application in
terms of whether there are conflicting users, whether there is any
environmental impact, how much water is available and the interests
of third parties. Approvals normally restrict the amount of water,
set the term of the approval and impose other appropriate
conditions.

Similarly, pursuant to section 8(1) of the Oil and Gas Activities Act, the
Commission has the authority to grant short-term approvals of no
more than 24 months to oil and gas operators for the use or
diversion of surface water sources in relation to "oil and gas
activities". In this case, the Commission had issued a number
of short-term approvals to Encana in relation to the exploratory
stages of its oil and gas plays in northeast British Columbia.
Encana said that at the exploratory phase its water use would be of
a short-term nature, and that its water use would change as its
operations change throughout the life cycle of its operations, such
that it may acquire a more permanent water use licence at more
mature stages of the play.

Discussion

The crux of the Petitioners' argument was stated as
follows:

The Commission grants repeated Section 8 Approvals that combine
to authorize companies to use or divert water for more than one
term and for more than 24 months. While no Section 8 Approval
singularly exceeds one term or the statutory limit, multiple
approvals are routinely granted over multiple years to the same
company, for the same purposes, at the same locations and thereby
violate s. 8 of the Water Act.

Accordingly, the issue before the Court was whether the
Commission has the power to grant section 8 approvals that extend
for more than one term or more than 24 months.

The Court approached the issue by setting out the process that
the Commission and FLNRO follow in granting an approval in any
given case:

Each application for a s. 8 approval undergoes a risk rating by
the Commission. Section 8 approvals all have an expiry date and
that date may not be extended or continued. If the approval has
expired, the operator must re-apply for a new approval. It is the
Commission's policy, as confirmed by the applicable application
manual, that any re-application is to be considered as a new or
"fresh" application with updated field information and
documentation being required from the applicant, consistent with
what is outlined above. This new application is then fully reviewed
afresh by Commission staff with all relevant and up to date data
and input from relevant persons.

After conducting an extensive analysis of whether the
Petitioners had standing to bring the case (they did) and the
applicable standard of review (reasonableness), the Court dismissed
the Petitioners' argument by stating:

On a plain reading of section 8 of the Water Act, in
context with the scheme of the Act, the object of the Act, and the
intention of the legislature, there is simply no prohibition
relating to consecutive short term water use approvals or even
recurrent approvals lasting in total in excess of 24 months. I
agree with Encana that, to the contrary, when read in context with
the entire Act, this provision gives FLNRO, or the Commission in
respect of oil and gas activities under the Oil and Gas
Activities Act, broad discretion to provide for effective and
efficient processes for the review of applications for short term
water use approvals and to ensure that applications that are
approved are in the public interest having regard to environmental,
economic and social factors.

The Court went on to say that there is no basis in either the
Act itself or from a public policy perspective to prevent someone
who had previously received an approval from re-applying for the
same or similar permission – the situation would be no
different if a third party came along and applied for the same or
similar approval. In either case, FLNRO or the Commission
would have the statutory authority to consider the application and
make a decision based on the present information before it.

Implications

The case provides clarity and reassurance to all those relying
on short-term water approvals issued under section 8 of the
Water Act and reassures regulators such as FLNRO or the
Commission that the practice they have been following is a sound
one. It is important to keep in mind though,
as previously noted, that the Water Act is soon to be
overtaken by the Water Sustainability Act, which expressly
provides that approvals for both water and ground water may be
recurrent. In the meantime, however, those seeking recurrent
approvals under the existing Water Act are reminded that
the Court was very clear that a recurrent approval is considered to
be a new application and subject to the same application process as
a new approval – meaning that existing approval holders will
not be "grandfathered" or favoured in respect of an
application for a recurrent renewal.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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